September 2011 Archives

Inbound Hiring

 
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After about four years working on DuckDuckGo as the only one full-time, I've hired Caine Tighe as employee #1! I have high confidence he's going to be a great fit because we've been already working together for over a year. But more on that in a moment.

First, a caveat. Don't take what I say about hiring too seriously for obvious reasons: I think almost everyone else in my situation would have started hiring a long time ago. My last company actually went from founding to exit with no employees. At my first company, I did hire about five people right out of the gate, but it was too many, too fast, and not the right people to boot. Arguably, the pendulum has swung too far back in the other direction. 

Anyway, I wrote about not hiring before. Now I want to tell you about inbound hiring.


Inbound Hiring

I get a lot of people offering to work for DuckDuckGo. I also get a lot of requests from people just wanting to help out. That's what I call inbound hiring, i.e. hiring out of these inbound requests.

My hunch (yes, it is just a hunch at this point) is that among this group of people are great candidates and (just as importantly) great fits for the company. The reasoning is three-fold.

First, excitement. All these people are excited about DuckDuckGo. After all, they took the time to come inbound. Something about the company motivated them to take that step, and I think that in and of itself is an amazing filter.

Second, because of that excitement, there is an opportunity to ease into a position over time (and it could be a long period of time). In Caine's case we started working on a project together last summer (unfortunately it is still not live). After it completed we worked on a bigger project together (Android app), and that project directly led to where we are today.

Third, they are the type of person (by definition) that takes initiative. They work on side projects. They have ideas. They go after what they want. Those seem like good things to me.

There are several other people who are currently working on DuckDuckGo in some capacity, and all of them came inbound in this manner. So far it makes for a great team environment.


Flow

That's all well and good, but how do you get enough inbound requests to matter?

In my case, I think it is three things:

  1. My blog. You need somewhere to speak, and a blog is great for that. It takes a lot of time and effort, but it is worth it, and not just for this reason. There are other places to speak though: conferences, hackathons, meetups, etc.

  2. Keep it real. You could talk about engineering, marketing, or a variety of subjects that every tech company has to deal with. But when you do talk about those things, you could either be super vague and boring or get into the nitty gritty of what you're doing, the reasoning behind choices you've made, and the resulting real numbers. What do you think gets people excited?

  3. Do something interesting. Or as Fred Wilson put it on his blog yesterday, have a Minimum Viable Personality. People want to be part of something that stands for something. They don't want to work for Initech.

Scaling

Will it scale? I don't know. Clearly I'm not at the point to find out.

This process at least seems to work well for companies at the earliest stages of hiring, i.e. for those critical first few employees. However, I suspect if done well it can scale decently well.

For example, you can foster company-universe communication via blogs, twitter, etc. You can have an open-source wing. You can funnel people through an internship program.

Maybe not all employees will come inbound, but perhaps a decent percentage can arrive in this manner. The real question, which I have no data for, is over the long run does this cohort preform better? If you have some data to shed light on this question, please share it.


DuckDuckGo

I'm trying to formalize this process a bit more. If you're interested start messing around on our GitHub wiki. I'm also working on an internship program for next summer. 

Welcome Caine!

Open Angel Forum Philly II Recap

 
OAFP2.jpgThis past Tuesday Antonio Tedesco and I held our second Open Angel Forum in Philly at Morgan Lewis. Time will tell whether some of the companies get funded or not, but we feel it again went really well.

Each of the seven companies demoed for five minutes and then had five minutes for questions. Before and after they had a chance to mingle with a room full of awesome angel investors from the area. Many of the angels from last time were there, and there were a bunch of new folks as well.

Compared to the previous companies, more of this batch had strong Philly connections. We didn't plan for that result, but welcome it as one of our primary goals is to increase the number of great startups forming and thriving in the Philly area.

We kept the company list confidential until the event. Here were the companies (in the order they presented):


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Instinct (NYC, prev in Philly) - virtual music teacher in your browser.

They help you learn real songs in minutes via interactive lessons that detect the pitch from what you play in real-time. Killer demo.  http://getinstinct.com/




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Tadpoles (Philly) - connecting parents with their childcare providers.

They're already in 40 day cares where teachers can take pictures and videos of the children to share with parents. http://www.tadpoles.com/


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Cloudmine (Philly, Dreamit) - back-end APIs for mobile developers.

They have APIs for mobile devs to offload common server tasks like user management and data storage. Popular at PennApps last weekend.  https://cloudmine.me/



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Card Gnome (Boulder, founder from Philly) - custom printed greeting cards.

They maintain a curated community of quality greeting card designers and then can print and send custom cards on demand. Already 1000s of great cards.  http://www.cardgnome.com/



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Inhabi (Philly) - apartments find renters.

They allow renters to submit a detailed application of what they want and then they match up landlords with those renters. Pilots in Boise, Portland and Philly.  http://inhabi.com/


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NoWait (Pittsburgh)  - wait list management for casual dining restaurants.

They have an iPad/iPhone system for restaurants that don't take reservations to manage their seating via text message.  In use by a bunch of restaurants already.  http://nowaitapp.com/


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Let's Gift It (NYC, Dreamit) - group gift giving plugin.

They integrate with retail Web sites to help them enable group gift giving. Their first customer is 1-800-Flowers. http://letsgift.it/



Let me know if you want an intro to any of these companies!

Given a second successful event, we are definitely planning to hold this event twice a year from now on. The next one should be around March of next year. Watch my Twitter stream for updates.

I know my lack of extreme excitement can be off-putting

 
I'm a pretty calm person. I hardly ever raise my voice. I also don't usually get extremely excited about stuff.

That's not to say I don't think things are cool. On the contrary, I see cool stuff all the time and tell people about it constantly.

It's more that it is not in my personality to be as likely to be emotionally taken with stuff as much as others seem to be. For example, I know a lot of people who get extremely impressed with other people's accomplishments when they meet or read about them. It manifests itself in statements like "X is amazing at Y. He/she revolutionized/invented Z."

Don't get me wrong -- I generally find these people interesting, as I find most people interesting and love to hear their stories. But I rarely put them on a pedestal in the same manner, and I know some people find it off-putting.

It works the other way around though too. I find it a bit off-putting when other people get extremely excited about seemingly run-of-the mill stuff. I guess it feels a little boy who cried wolf.

I suppose my threshold is just a lot higher. I'm more excited about two or three standard deviations when other people seem to get enthralled by one.

I don't get offended and riled up on the negative side as much either, politics or otherwise. This personality trait has definitely increased with age. As a teenager I definitely got more exited about stuff in both directions.

Not that I can control it, but aside from being off-putting to some people, I think it has helped me manage the startup career path. I have up and down moments like everyone else, but they don't seem to hit me as hard. I generally don't get taken with fads or "celebrity" endorsements/advice. It helps me stay on critical path and work toward a long-term vision.

I'm not saying this way is better. Being personality driven, there doesn't seem to be much choice in the matter anyway.

Along time ago I thought it might be apathy, but I was wrong about that. I'm not apathetic. In fact, far from it. Now I'm just more secure about who I am and understand it's just part of my personality.

What story are you trying to tell to potential investors?

 
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Lately I've found myself giving a lot of pitch deck advice for seed rounds. Usually I point people this post and tell them to a) stick to six slides with mostly images/graphs; b) drop any financial projections; and c) drop any executive summary or even longer stuff.

Then last week I read a @bryce post entitled You Can Never Size a Market in Excel. I agree with his specific point about market sizing, but I think it can be usefully generalized as well. The following is the end of the post, which frames that generalization.

An investor's instinct around something as fundamental as whether your business can reach the scale needed for venture capital returns is one that won't be found scouring the latest market forecasts from Forester or Goldman Sachs. It won't be found in endless meetings and it won't be found in detailed financial forecasts or market sizing exercises.

It will be found in the connection an investor makes to you, your product and your vision. Either they will believe it or they won't. If they do, they'll want to invest. If they don't, they'll simply keep wrestling with the question of "how big can this get" in an unresolvable circle of swirling doubt. All of the Excel wizardry in the world won't resolve it.


Your story either clicks with an investor or doesn't, and in my (albeit limited) experience that clicking either happens really fast or it will take too long to matter.

This is why that first impression, including your email, intro path and pitch deck is so important. It's your chance to make that click happen, or blow it. It's hard to recover from the wrong framing.

So with that in mind, I'm changing my pitch deck advice for seed rounds to be a bit higher level. Yes, you should stick to six slides blah blah blah, but you should be thinking more about what story you are telling to potential investors. And if you're really good, what story you are telling to a particular investor.

For me at least, I think you want to nail four things in your story:

  1. What will it take to get this business to 1-3M revenue? This part of the story shows you've thought about how this could be possible, how many customers you'd need, how much they might pay/convert/draw in/whatever, etc. None of it needs to be correct, but it needs to be plausible. If you already have some traction, perfect -- use that as a lead-in.

  2. What are the possible medium and longer-term exit opportunities?  This part of the story shows you understand your space, how you align strategically with it, and how big you're thinking. Again, be plausible. Anything else is a red flag.

  3. What about your team says you can execute on this? This part of the story shows you personally, and I'd get really personal.

  4. Why are you raising money? Every story needs an ending, and this is usually it. We're trying to hit this milestone by doing a, b and c. That milestone is important because of x, y and z.

Entrepreneurs like to include all sorts of other stuff in their presentations. I think anything that isn't on story is irrelevant. Your goal is to make that story compelling so it clicks with as many people as possible.

Of course there are many other ways to tell the story. You could take the where we've been, where we are and where we're going approach. You could concentrate on what you think is your most compelling piece of data/traction and tell the story behind that. There are actually a bunch of options.

The point though is pick the one that you think has the highest probability of clicking. If it clicks, that doesn't mean someone will invest quickly or at all, but it is usually a necessary condition to investing. A corrolary to that is if you don't think you clicked, then you should probably move on. 

Generally, but not always, you can feel if someone is excited or not.  Body language helps a lot here, which is why it is a good idea to try to meet in person or at least push for Skype video. 

I hope it goes without saying that when you have that meeting you should be telling that story. I wouldn't walk through the presentation at all unless someone asks. Instead, just start story telling.

Update: I have some evolved advice now.
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